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Tuesday November 29th, 2022

Amid fuel shortage, SriLankan flights diverted to Mattala to “manage” fuel at BIA – official

ECONOMYNEXT – State-owned SriLankan Airlines has diverted at least two aircrafts from the main Bandaranaike International Airport (BIA) last week to refuel at Mattala Rajapaksa International Airport (MRIA) to manage its fuel stocks in BIA, officials said on Wednesday.

Two government sources told Economy Next that two SriLankan Airline flights to Sydney and Melbourne – UL 304 and UL-306 – on Thursday, April 19th were diverted to MRIA for refuelling amid “concerns over fuel shortage” at the BIA.

A SriLankan Airlines official told Economy Next that the diversion was due to a “technical reason”.

Shehan Sumanasekara, Director of Operations, Airport and Aviation Services Limited confirmed that one flight diverted to MRIA was bound to Melbourne.

“They were diverted for refuelling,” he told Economy Next.
When asked if the BIA does not have enough fuel he said:” “We do, but we are managing. We have two tanks – one at Mattala and one at BIA.”

“What happened was fuel in Mattala was reserved for European flights. But since they reduced after the Russian-Ukrainian war, the fuel was just being stored there,” Sumanasekara said denying speculations of fuel shortage at the BIA.

“Therefore we allowed some flights to come and refuel at Mattala as well because BIA’s fuel was finishing faster while a big stock remained at MRIA.”

Sri Lanka is facing a severe shortage of fuel as they have run out of dollars to import fuel on time.

The government this week agreed to amend the Petroleum Product Act to allow some select parties to provide licenses to import fuel.

The state-owned Ceylon Petroleum Corporation (CPC), the sole importer and distributor, was unable to get foreign exchange to import fuel and still face difficulties even after securing 500 million US dollar credit line to import fuel from India. (Colombo/April27/2022)

Comments (2)

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  1. Luxman says:

    If srilankan not making a operation profit on the CMB/ MLE sector why do we fly???

  2. Nihal says:

    It’s more profitable to road transport fuel to BIA than to fly the aircraft to Mattala at low altitude and extra landing which is added maintenance costs

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  1. Luxman says:

    If srilankan not making a operation profit on the CMB/ MLE sector why do we fly???

  2. Nihal says:

    It’s more profitable to road transport fuel to BIA than to fly the aircraft to Mattala at low altitude and extra landing which is added maintenance costs

Sri Lanka rubber farmers to get boost from France, Michellin

ECONOMYNEXT – Sri Lanka will start a project supported by France and Michellin group to support 6,000 rubber farmers, cabinet spokesman Minister Bandula Gunawardena said.

Rubber farmers in Badalgama and Medagama in the Moneragala district will be supported improve their capacity and supply chains at a cost of 726,700 Euros.

Financial support will be provided by France’s Michellin group which has a subsidiary in Sri Lanka and the government of France.

The project will be implemented by France’s Ksapa group under the guidance of Ministry of Industries.

The cabinet of ministers had cleared a proposal by the Plantations Industries Minister to enter into an agreement to implement the project. (Colombo/Nov29/2022)

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A new Sri Lanka monetary law may have prevented 2019 tax cuts?

ECONOMYNEXT – A new monetary law planned in 2019, if it had been enacted may have prevented the steep tax cuts made in that year which was followed by unprecedented money printing, ex-Central Bank Governor Indrajit Coomaraswamy said.

The bill for the central bank law was ready in 2019 but the then administration ran out of parliamentary time to enact it, he said.

Economists backing the new administration slashed taxes in December 2019 and placed price controls on Treasuries auctions bought new and maturing securities, claiming that there was a ‘persistent output gap’.

Coomaraswamy said he keeps wondering whether “someone sitting in the Treasury would have implemented those tax cuts” if the law had been enacted.

“We would never know,” he told an investor forum organized by CT CLSA Securities, a Colombo-based brokerage.

The new law however will sill allow open market operations under a highly discretionary ‘flexible’ inflation targeting regime.

A reserve collecting central bank which injects money to push down interest rates as domestic credit recovers triggers forex shortages.

The currency is then depreciated to cover the policy error through what is known as a ‘flexible exchange rate’ which is neither a clean float nor a hard peg.

From 2015 to 2019 two currency crises were triggered mainly through open market operations amid public opposition to direct purchases of Treasury bills, analysts have shown.

Sri Lanka’s central bank generally triggers currency crises in the second or third year of the credit cycle by purchasing maturing bills from existing holders (monetizing the gross financing requirement) as private loan demand pick up and not necessarily to monetize current year deficits, critics have pointed out.

Past deficits can be monetized as long as open market operations are permitted through outright purchases of bill in the hands of banks and other holders.

In Latin America central banks trigger currency crises mainly by their failure to roll-over sterilization securities. (Colombo/Nov29/2022)

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Sri Lanka cabinet clears CEB re-structure proposal: Minister

ECONOMYNEXT – Sri Lanka’s cabinet has cleared proposals by a committee to re-structure state-run Ceylon Electricity Board, Power and Energy Minister Kanchana Wijeskera said.

“Cabinet approval was granted today to the recommendations proposed by the committee on Restructuring CEB,” he said in a twitter.com message.

“The Electricity Reforms Bill will be drafted within a month to begin the unbundling process of CEB & work on a rapid timeline to get the approval of the Parliament needed.”

Sri Lanka’s Ceylon Electricity Board finances had been hit by failure to operate cost reflective tariffs and there are capacity shortfalls due to failure to implement planned generators in time. (Colombo/Nov28/2022)

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